An 'expansion' in the economy is also called an 'upturn'. What happens during an upturn?

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BlackTom AI · Accepted Answer

First, let’s restate the question and the choices to make sure we’re evaluating exactly what’s being asked.
Question: An 'expansion' in the economy is also called an 'upturn'. What happens during an upturn?
Answer options:
- a. Consumption is decreasing
- b. Unemployment is increasing
- c. Production is increasing
- d. Real GDP is declining

Now, evaluate each option one by one with the concept in mind: an upturn or expansion is a phase in the business cycle where overall economic activity rises from a trough.
- Option a: Consumption is decreasing. During an expansion, income tends to rise and consumer confidence improves, leading to higher consumption rather than a decrease. This makes the statement false because it runs opposite to the typical upturn dynamics.
- Option b: Unemployment is increasing. In an expansion, firms hire more workers as production ramps up, so unemployment generally falls. An increasing unemployment rate is characteristic of a recession or contraction, not an expansion. This makes this option incorrect.
- Option c: Production is increasing. As demand strengthens and firms expand output to meet higher sales, production rises during an upturn. This aligns with the core idea of an expansion, making it a correct description of the phase.
- Option d: Real GDP is declining. Real GDP growth is positive during an expansion, reflecting higher overall economic output. A declining real GDP would indicate a contraction, not an upturn, so this option is incorrect.

Summarizing the reasoning: the hallmark of an upturn is rising economic activity, which manifests as increased production (and typically higher GDP, lower unemployment, and stronger consumption). Among the options, only option c correctly captures this key feature of an expansion.

Note: If you’re thinking about the broader picture, you’d expect concurrent improvements in several indicators during an upturn, but the question focuses specifically on the production aspect, which is why option c is the correct choice in this context.

MUF0062 Economics Unit 2 - Semester 2, 2025 The Business Cycle - Video and Quick Quiz (7 - 10 minutes)

An 'expansion' in the economy is also called an 'upturn'. What happens during an upturn?

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MUF0062 Economics Unit 2 - Semester 2, 2025 The Business Cycle - Video and Quick Quiz (7 - 10 minutes)

An 'expansion' in the economy is also called an 'upturn'. What happens during an upturn?

View Explanation

Log in for full answers

Similar Questions

Use the following diagram to answer the next question. The phases of the business cycle from points A to D are, respectively

Based on your answer to the previous question, you know that the economy is currently in a boom .

Based on your answer to the previous question, you know that the economy is currently [ Select ] in a recession at potential in a boom .

A complete business cycle is described, in appropriate order, by which of the following sequences?

Use the diagram below to answer the following question. Based on this diagram, long-run growth is represented by ___, and short-run expansion is represented by ___.

_____________ is alternating periods of economic expansion and economic recession.

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Use the diagram below to answer the following question. Based on this diagram, long-run growth is represented by _, and short-run expansion is represented by _.